MRA+10 Early Retirement: The 5% Penalty, FEHB Gap, and When It Makes Sense

MRA+10 is the FERS provision that lets you leave federal service before a "full" retirement — but it comes with a permanent 5% per year penalty, no FERS supplement, and a health insurance problem most people don't see coming. Here's the full picture.

What MRA+10 is — and what it isn't

FERS gives you several paths to retirement. "Regular" retirement (full benefit, no penalty) requires: age 62 with 5+ years, age 60 with 20+ years, or your Minimum Retirement Age (MRA) with 30+ years. MRA+10 is the alternative for employees who want to leave earlier than those thresholds allow — it permits an immediate annuity at your MRA with as few as 10 years of creditable service, but the annuity is permanently reduced for each year you're under 62 when payments begin.²

It is not an involuntary separation. It is not VERA (which requires an agency-offered early retirement window). It is not a deferred retirement (which is a different provision for those with at least 5 years who leave before MRA). MRA+10 is a voluntary choice available any time you've hit your MRA and 10 years of service — whether you're leaving for health reasons, a private-sector opportunity, or simply want out of federal service.

Are you eligible? — the MRA table

Your Minimum Retirement Age depends on your birth year. Congress phased it from 55 to 57 for employees born 1948 through 1970:³

Most current active federal employees were born 1964–1975, putting their MRA at 56 or 57. You also need at least 10 years of creditable civilian service. Military service may count if you pay the deposit; sick leave and part-time service credit apply per standard FERS rules.

The penalty — 5% per year, permanently

The reduction equals 5% for each year (5/12 of 1% per month) that your annuity begins before your 62nd birthday. The math is applied to the computed annuity, not retroactively adjusted when you turn 62. This is a permanent, lifetime reduction — it does not go away or phase out at age 62. Your annuity is locked in at the reduced amount and all future COLAs (if any) are applied to the reduced base.²

For a GS-13 step 5 in a mid-cost locality, $12,375/yr is about 11% of pre-retirement salary. Contrast this with waiting until age 62 with 20 years: $110,000 × 1% × 20 = $22,000/yr — 78% more, without the reduction — plus Social Security eligibility, IRMAA exposure drops, and no gap in FEHB.

Two paths: immediate vs. postponed annuity

When you're eligible for MRA+10 and want to leave federal service, you have a choice:⁴

Path 1: Take the immediate annuity (with penalty)

Your annuity starts the month after you separate, reduced by 5% per year under 62. Your FEHB and FEGLI continue (you pay the retiree share of premiums). You get no FERS supplement. This path makes sense if you need income now — the reduced annuity is real money arriving monthly regardless of what else you're doing.

Path 2: Postpone the annuity to reduce or eliminate the penalty

You separate and elect to postpone your annuity start to a later date. The penalty is computed from when the annuity starts, not from when you separated — so postponing always reduces or eliminates the reduction. Two breakpoints:²

• Age 62 with 10+ years: postpone until 62 → zero reduction, regardless of how many years you have. This is the cleanest exit: leave at 57, annuity starts at 62, no penalty.
• Age 60 with 20+ years: postpone until your 60th birthday → zero reduction. So a GS-14 with 25 years at age 57 can leave, wait 3 years to 60, and start a full unreduced annuity.

Partial postponement also helps: leaving at 57 and starting annuity at 61 (with under 20 years) means just 1 year under 62 — a 5% penalty instead of 25%. Every year you postpone saves 5% for life.

FEHB — the health insurance problem you must plan for

This is the piece that derails many MRA+10 postponement plans. When you postpone your annuity (Path 2), your FEHB enrollment is suspended at the moment you separate from service. It does not continue in the background. You will not have federal health insurance during the gap between separation and annuity start.⁵

Your options during the gap:

• Temporary Continuation of Coverage (TCC): you can continue your current FEHB plan for up to 18 months by paying 102% of the full premium (both the government and employee share, plus 2% admin). For a GS-14 family enrolled in Blue Cross Blue Shield Standard, that can run $2,500–$3,200/month — a significant additional cost to factor into your postponement math.
• ACA marketplace plan: FEHB termination qualifies you for a special enrollment period. Marketplace premiums for a 57-year-old can vary widely by plan, location, and income. If your income is low enough in the postponement gap (before annuity starts), you may qualify for APTC subsidies.
• Spouse's employer plan: if a spouse has employer coverage, qualifying life event rules typically allow you to join.

When your annuity eventually starts, your FEHB can be reinstated — as long as you were enrolled for the 5 years immediately before your separation (the standard 5-year rule). Most career employees meet this, but it's worth confirming before you separate. OPM's handbook confirms FEHB reinstatement is available when the postponed annuity begins.⁵

No FERS supplement — ever, under MRA+10

The FERS annuity supplement is explicitly not payable to employees who retire under the MRA+10 provisions — even if you have 20 or more years of service.⁶ The supplement is only available to employees who retire under one of the "regular" immediate annuity paths (MRA+30, 60/20) and who are under 62 at retirement. MRA+10 retirees are excluded by statute.

Why this matters: a full-career federal employee with 30 years retiring at MRA under regular rules might receive a FERS supplement of $1,500–$2,000/month until age 62 — a real bridge payment. MRA+10 retirees receive nothing comparable. That income gap, combined with the annuity penalty, makes the true cost of MRA+10 substantially larger than the annuity reduction alone suggests.

TSP access — the Rule of 55 still applies

If you separate from federal service in or after the calendar year in which you turn 55 (age 50 for special category employees), you can withdraw from your TSP without the 10% early withdrawal penalty — regardless of whether you take an immediate or postponed annuity.⁷ This is the IRS Rule of 55 for employer-sponsored plans, codified in IRC § 72(t)(2)(A)(v). Normal income taxes still apply to traditional TSP withdrawals.

If you're younger than 55 when you separate, the 10% early withdrawal penalty applies to TSP distributions until you turn 59½. This is a meaningful constraint for employees who leave before 55 on a deferred retirement (vs. MRA+10, which requires you to be at your MRA, which is at least 55).

The math: when does staying longer actually pay off?

MRA+10 is almost always a trade of current flexibility against lifetime income. The question is how large that trade is and whether the benefit of leaving now outweighs it. Three scenarios for a GS-14 Step 5 with high-3 of $130,000:

Leaving at 57 with 15 years and taking the immediate annuity costs $4,875/yr (vs. postponed) or $11,375/yr (vs. staying to 60 with 20 years) — permanently. Over a 25-year retirement to age 82, that's roughly $284,000 in cumulative lost income in the worst comparison, not accounting for investment return on the difference.

The counterargument: those 3–5 additional years of federal service have an opportunity cost too. If the private sector offers $40,000–$80,000 more per year in salary, the tradeoff may favor leaving. The math is specific to your situation. That's exactly what a federal benefits specialist models for you.

Who should seriously consider MRA+10?

MRA+10 is the right tool in specific circumstances:

• Private-sector opportunity you can't defer. A job offer paying $60K more than federal pays back the annuity reduction in a year or two. The long-term wealth math may easily favor leaving.
• Health or family reasons. Caregiving, a personal health issue, or simply burnout — the non-financial value of leaving may dominate the income cost. Take the immediate annuity, keep FEHB, and let the reduced pension be the price of the change.
• Short-service employees who vested early. If you have 10–12 years and you're 58, the annuity is small regardless of penalty — the difference between 10% and 20% of $80,000 is $8,000/yr either way. Staying 3 more years to hit a "regular" threshold may not be worth it if the job is untenable.
• The postpone option with bridge income. If you have 20+ years and can cover health insurance for 3 years, postponing to 60 for an unreduced annuity is mathematically clean. The FEHB gap is manageable if you or your spouse has coverage alternatives.

Who should not use MRA+10 without careful modeling

• Employees within 3–5 years of MRA+30. The regular MRA+30 retirement comes with zero reduction, the full FERS supplement ($1,500–$2,000+/month until 62), and uninterrupted FEHB. Trading all of that for a few years of exit freedom is rarely the right call without explicit math.
• Mid-career employees (under 53) expecting significant salary growth. Your high-3 will be much higher in 5 years, particularly if you're approaching a GS grade increase or SES. The annuity grows on both the service-year and high-3 dimensions — both are in your favor by waiting.
• Employees without a FEHB bridge plan. Don't postpone if you haven't verified what health coverage costs from 57 to 62. TCC at $3,000/month is $180,000 over 5 years — potentially more expensive than the lifetime value of eliminating the annuity penalty.

Sources

1. OPM — FERS Types of Retirement (MRA+10 eligibility and immediate vs. postponed annuity).
2. OPM — FERS Computation (5% per year reduction formula; unreduced thresholds at 60/20 and 62+).
3. OPM — FERS Eligibility (Minimum Retirement Age table by birth year, 5 U.S.C. § 8414).
4. OPM FAQ — What is an MRA+10 annuity under FERS? (immediate vs. postponed; penalty elimination).
5. OPM FAQ — What happens if I postpone the MRA+10 annuity? (FEHB suspended, TCC available 18 months, reinstatement when annuity starts).
6. OPM CSRS/FERS Handbook Chapter 51 — Retiree Annuity Supplement (not payable for MRA+10 retirements).
7. TSP — Withdrawals (separation at 55+, Rule of 55, no early withdrawal penalty for those separated at MRA).

FERS benefit rules verified against OPM publications, current as of April 2026. MRA table reflects 5 U.S.C. § 8414. The 5% per year reduction, FEHB suspension under postponed retirement, and FERS supplement exclusion for MRA+10 retirees are longstanding statutory provisions unchanged by SECURE 2.0, OBBBA, or the Social Security Fairness Act.